Buyanga offers Rand 1 billion for Zimbabwe’s sovereign wealth fund

HARARE – The African Medallion Group (AMG) says it has mobilised Rand 1 billion worth of gold assets, which can be leveraged to jump-start Zimbabwe’s sovereign wealth fund (SWF).

This also comes as the Johannesburg-based yellow metal processor’s founder Frank Buyanga has reiterated his call for a reform of local parastatals, saying such a development was key in the country’s bid to lure investments and return to prosperity.

“The establishment of a SWF was identified as one of the financing mechanism necessary to ensure a more effective implementation of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation. As such, my team… would like to actively participate by funding start up as well as balance sheet support… (to) allow Zimbabwe’s SWF to start making traction on its goals to develop (the country) economically,” Buyanga said in a January 10 letter to Finance secretary Willard Manungo.

“As AMG, we want to be part of the new Zimbabwe by helping our SWF reach its goals and also get the necessary financial ability to do so. As an entrepreneur, l am aware that… the fiscus is stretched so thin and has nothing to spare, (and hence) the practicality of SWF for Zimbabwe is then close to impossible,” he said.

With SWFs being typically a state-managed pool of money drawn from any nation’s resource-driven surplus and reserves, its proceeds are usually invested in various international assets such as bonds, property and equities for the future benefit of the country.

Despite having a 10-member board in July 2015 and receiving a $1 million budget allocation in the same year, the fund has failed to take off due to economic challenges and ills, including a recurrent budget deficit, which several analysts and government officials have identified as the single largest impediment to Zimbabwe’s dreams.

“…government must budget for a surplus. Our budget is the most feasible source for creating a SWF. Data from past… reports show that the (coalition government)… created a budget surplus of $253 million. If that surplus had been viewed as seed for investment, it would have been treated as a SWF,” management consultant and newspaper columnist Brett Chulu said, adding if the country also “embraces the set-aside-seed-first-before-expenses thinking”, it will achieve bigger things.

“…imagine us as a country deliberately creating a budget surplus of 10 percent of previous year’s actual income. We can use a prudential approach to budgeting used by wise not-for-profits, who always set their expected income for the following at 90 percent of the previous year’s income. Using a baseline of $4 billion… at least $400 million can be set aside,” he said, adding the country could earn as much as $20 billion by investing in 20-year bonds with a seven-percent interest.

In the meantime, Buyanga’s offer also comes as President Emmerson Mnangagwa has said government was planning to build a gold and diamond reserve ahead of the reintroduction of the Zimbabwean currency and Chulu says Harare must seriously consider a legal framework to back the idea of an SWF.

While Manungo was unavailable for comment on the AMG letter and initiative, his fellow board member and Zimbabwean SWF chair Kombo Moyana on Thursday said he hadn’t been apprised of the development yet.

“I am not aware of that communication and maybe it will be shared in due course. Even, though, we were allocated $1 million as start-up capital in 2015, there hasn’t been much going on due to the prevailing economic conditions, but we are hopeful now of a change in circumstances owing to the new policy direction,” he said.

Buyanga, meanwhile, has repeated his calls for an overhaul of the culture within Zimbabwean parastatals, saying such an approach is the only way out for a turnaround and improved economic fortunes.

According to the Hamilton Property founder, the reform process could only be achieved through the establishment of a surveillance and monitoring unit – his fourth plea in as many years – to drive strategic management issues, and corrective measures in state-owned enterprises (SOEs).

“In the spirit of harnessing state resources… I strongly feel that the government should come up with additional strategies to curb corruption, improve capacity utilisation (in industries) and instill a culture of accountability within all government parastatals… companies that government has shareholding,” Buyanga said.

The maverick entrepreneur has not only indicated that Zimbabwe’s odd-114 parastatals were crucial for creating employment and growth of public infrastructure, but also boosting confidence in the Harare administration’s policies and curbing such things as brain drain.

Buyanga’s views also come as Mnangagwa’s government has unveiled plans to privatise, if not sell, most of these loss-making entities, which have continued to haemorrhage the national fiscus for decades.

In 2016, Auditor-General Mildred Chiri said some 38 SOEs had chalked nearly $300 million in losses and reports also indicate that the key sector was in dire need of recapitalisation to the tune of $30 billion-plus.

Some of the losses, government auditors say, are closely related to rampant corporate governance failures and malpractices.

And the South African-based businessman’s insistence on military-led anti-graft measures within the country’s parastatals – probably one of the key pillars in government’s efforts to lure new cash under its enhanced privatisation bid or process – also come against the backdrop of similar petitions to ex-president Robert Mugabe’s regime.

About 14 months ago, Buyanga wrote to former State House director Innocent Tizora for Zimbabwe to keenly look into the status and welfare of its public-owned institutions, as “dossiers… proved massive misappropriation of resources across the commercial divide and this inevitably has a direct impact on the population”.

At the time, the self-styled property investor and financier not only emphasised that parastatals were crucial for “cohesion, social upliftment… unlocking balance of payment support and trade integrity”, but were also key for the revival of sectors including agriculture, mining, energy, health and tourism – and $100 million would have been realised within 12 months of his September 2016 proposal. – Financial Gazette